Ahmedabad: Buoyant economy and influx of industries has seen a two-fold rise in prices, says Avinash Nair
For real estate companies, Ahmedabad has turned out to be a proverbial goose that lays the golden eggs. Property prices across the city have doubled since 2010. While Godrej Properties, which got a major chunk of its revenue in the last quarter from just one project here, is reaping the benefits of being the first-mover among the real-estate bigwigs, others like the Hiranandanis, the Ajmeras, the Tatas and the Adanis too have established their bases in Ahmedabad over the last couple of years.
The reasons are not far to seek. Real-estate experts believe the influx of industries in the nearby town of Sanand (located 40 kms from Ahmedabad) has been responsible for this spike. Apart from auto companies Tata Motors, Ford and Peugeot, the town has multinational companies like Bosch, Hitachi Hi-Rel Electronics, Colgate Palmolive, Hyundai Transformers and AIA Engineering buying land for their respective businesses.
“Ahmedabad has become high-priority for national developers because of its growth. In the last two years, there has been almost a two-fold rise in real estate prices. To put it simply, a flat that used to cost Rs 63 lakh in a prime location in the city, is now priced at Rs 1.2 crore. No other city in the country has seen such a steep growth,” says Nirav Kothary, regional director of a global property consulting firm, Jones Lang LaSalle (JLL). Godrej which sold flats at Rs 2,450 per square feet in March 2010, is now offering similar flats at a basic price of Rs 3,300 per square feet.
Excluding the three townships currently being constructed, around 16,000 apartments are being developed in Gujarat. As far as commercial properties supply is concerned, nearly 6 to 8 million square feet is under construction. This supply is expected to be delivered in next 2-3 years.
In the last three years, approximately 30,000 residential units and 10 million square feet of commercial (including retail) were made available in Ahmedabad. “Gujarat as a state has been growing rapidly over the past decade and Ahmedabad’s real estate sector is one of the key beneficiaries of this growth. Ahmedabad has been one of the best performing markets of the 12 cities in which Godrej Properties has a presence,” Pirojsha Godrej, the new managing director of the company told The Indian Express after the company’s third quarter results.
Gujarat’s state domestic product has been clocking double digit growth since the last few years. According to the data published in the socio-economic review for the state, Gujarat has clocked a 211 per cent growth during the six years between 2004-05 and 2009-10. This is almost at par with states like Andhra Pradesh, Tamil Nadu and Maharashtra.
According to data provided by global property consulting firm, Jones Lang LaSalle (JLL), the residential real-estate prices in some of suburban locations of Ahmedabad now stand higher in the suburbs of larger cities like Bengaluru, Hyderabad, Chennai and Pune. For instance, apartments in Whitefield (Rs 3,250 per sq.ft.) and Mysore Road (2,450 per sq. ft.) in suburban Bengaluru are cheaper than those on Sardar Patel Ring Road where prices are as high as Rs 3,500 per square feet.
Even when prices are at an all-time high, developers in Ahmedabad foresee another round of price hike in the coming months. The commissioning of large automobile projects like Ford, Peugeot and Maruti Suzuki in the coming years will drive this increase, say experts.
Mumbai-based Ajmera Group, which is currently constructing a luxury residential project in partnership with a local developer in the western part of the city, predicts a 12 per cent rise in prices in the coming days. “Rising job opportunities, growing income levels and increased migration are reasons why Ahmedabad stood strong (in the past) and will continue to be stronger for the next few years. Though a correction is expected, it will not touch matured locations,” says Dhaval Ajmera, director, Ajmera Realty & Infra India.